Deck 1: Introduction to Business Accounting and the Role of Professional Skills

Question 1

Information explosion, evolving forms of businesses, more complex business activities, increased regulations, globalisation and technological advances are all factors affecting the ______________of the business environment.

Answer 1

complexity

Question 2

To be able to 'go with the flow' a successful businessperson should be __________ and ___________.

Answer 2

flexible; adaptable

Question 3

__________ ___________ is a system in which individuals own businesses that produce and sell services and/or goods for a profit.

Answer 3

Private enterprise

Question 4

____________________ businesses purchase goods for resale to their customers.

Question 5

____________________ are merchandising businesses that sell their products directly to the final customer or consumers.

Question 6

____________________ are merchandising businesses that sell their goods to retailers or other commercial users.

Question 7

____________________ businesses make their products and then sell these products to their customers.

Question 8

A business is said to be ____________________ when it is capable of paying off its debts.

Question 9

____________________ refers to the funds a business needs to operate or expand operations.

Question 10

An ____________________ is an individual who is willing to risk the uncertainty of not knowing if customers will buy what their business provides, in exchange for the reward of a profit, along with the reward of seeing their business succeed.

Question 11

_________________________ are businesses owned by one person who is the sole investor of capital into the business.

Question 12

For a sole proprietorship, ____________________ means the owner's personal assets may be at risk if things go wrong in the business.

Question 13

____________________ are businesses owned by two or more individuals who each invest capital, time and/or talent into the business and share in its profits and losses.

Question 14

Within a partnership, each partner is an ____________________ of the partnership, meaning each partner has the authority to act for the other partners.

Question 15

A ____________________ is a business organisation that has a separate legal identity from its owners.

Question 16

The __________ ___________ is the process used to identify, measure, record and retain information about a business' activities so that the business can prepare its financial statements.

Question 17

__________________ is a management activity which establishes the goals of a business and the means of achieving these goals.

Question 18

_______________ is the difference between the total revenues and the total costs (expenses) of the business during a specific time period.

Question 19

An _______________ summarises the results of a business' operating activities for a specific time period.

Question 20

A business' financial statement is meant to convey information about the business to ________ and __________ users in order to help them make decisions about the business.

Question 21

Business manages must be able to use their skills to evaluate and manage the vast amount of information which is available to their advantage.

Question 22

The term 'private enterprise' means that businesses keep their accounting information private.

Question 23

A dental surgery is an example of a service business.

Question 24

A supermarket is an example of a retailing business.

Question 25

Sources of capital for a business include owner investments, and borrowing or seeking investments from outsiders.

Question 26

The owners of businesses operating as sole traders, partnerships and companies all have unlimited liability.

Question 27

Many businesses have no need for accounting information and can actually exist without an accounting system.

Question 28

A business' accounting system can provide information for both external and internal users.

Question 29

An internal user of accounting information would receive "tailor-made" information from the accounting system.

Question 30

An external user of accounting information would receive 'tailor-made' information from the accounting system.

Question 31

Operating is the management activity concerned with measuring a business' actual operations and progress against benchmarks.

Question 32

Cost analysis reports are management tools the accounting system provides to assist management in planning activities.

Question 33

Feedback from operations can be effectively used in the planning, operating or evaluating stages of a business.

Question 34

Cost analysis tells a business owner the selling price of a product or service.

Question 35

A balance sheet lists the business' assets, liabilities and owners' equity at a given date.

Question 36

Many business and accounting issues cannot be interpreted as absolutely right or wrong.

Question 37

A sustainable business is one that ensures all processes, products and activities, while maintaining a profit, address current environmental concerns.

Question 38

The modern-day accountant generally works alone and therefore does not require teamwork skills.

Question 39

To be useful, information must be relevant to the decision at hand.

Question 40

The appearance of truth is valued above all else for the critical thinker.

Question 41

Which of the following is an example of a service business?

A) Qantas Airlines
B) Woolworths
C) Dell Inc.
D) Toys'R'Us

Question 42

Which of the following is an example of a manufacturer?

A) Dell Inc.
B) Bob's lawnmower services
C) Woolworths
D) Qantas Airlines

Question 43

What is the primary difference between a manufacturer and a merchandiser?

A) Merchandisers purchase finished goods ready to sell, whereas a manufacturer must create the goods.
B) Merchandisers are retailers, while manufacturers are service providers
C) Merchandisers do not sell directly to the public, but rather only to manufacturers.
D) Manufacturers buy the finished goods from a merchandiser then resell it, basically acting as a middle man.

Question 44

Limited liability is a benefit for the owners of:

A) sole proprietorships.
B) partnerships.
C) company/corporation.
D) sole proprietorships and partnerships.

Question 45

The Board of Directors makes business decisions for:

A) sole proprietorships.
B) partnerships.
C) company/corporation.
D) all forms of businesses.

Question 46

Management accounting information:

A) is a one size fits all approach to reporting business results.
B) can be tailored to the needs of the internal user.
C) is used by lenders to make credit decisions.
D) helps shareholders make decisions.

Question 47

Which of the following would a manager do as a part of planning activities?

A) Compare estimates to benchmarks.
B) Purchase inventory.
C) Decide which products to sell.
D) Establish goals.

Question 48

Operating activities consist of:

A) how products get made and sold.
B) measuring actual operations and progress against a standard or benchmark.
C) establishing business goals.
D) establishing means of achieving business goals.

Question 49

Evaluating activities consist of:

A) establishing business goals.
B) establishing a means of achieving business goals.
C) providing feedback to managers to correct deviations from standards.
D) setting benchmarks or standards.

Question 50

A budget:

A) quantifies management's plans.
B) determines and evaluates the cost of specific products or activities in a business.
C) compiles actual costs for a given period.
D) is used to determine if a product should be continued or discontinued.

Question 51

Which of the following summarises the results of a business' operating activities for a specific time period?

A) Income statement
B) Generally accepted accounting principles
C) Balance sheet
D) Statement of changes in owner's equity

Question 52

The business' economic resources are:

A) Revenues.
B) Liabilities.
C) Owners' equity.
D) Assets.

Question 53

The business' obligations to its creditors are:

A) Liabilities.
B) Expenses.
C) Payments.
D) Owners' equity.

Question 54

Financial position of a business can best be evaluated with which of the following?

A) Net income.
B) Assets, liabilities and owner's equity.
C) Cash received and paid.
D) Owner investments.

Question 55

Which of the following summarises a business' receipts and payments for a specific period of time?

A) Budget.
B) Income statement.
C) Balance sheet.
D) Cash flow statement.

Question 56

When calculating the closing balance of owner's equity for a business, which of the following should be added to beginning owner's equity?

A) Net income and owner's contributions
B) Assets and liabilities
C) Assets and owner's contributions
D) Owner's contributions and owner's withdrawals

Question 57

Which of the following is the first stage in solving a business problem?

A) Knowing the possible outcomes.
B) The recognition and definition of the problem.
C) Understanding the available resources to solve the problem.
D) Assessing the total cost and benefits of solving the problem.

Question 58

Which of the following is the correct order of the four stages of the critical thinking process?

A) Recognise problem, identify alternatives, evaluate alternatives, make decision
B) Identify alternatives, evaluate alternatives, solve problem, evaluate solution
C) Identify alternatives, evaluate alternatives, make decision, evaluate decision
D) Recognise problem, identify alternatives, solve problem, evaluate solution

Question 59

What is private enterprise?

Question 60

What are the primary similarities and differences between service businesses and merchandising/manufacturing businesses?

Question 61

Entrepreneurship is a combination of which three factors?

Question 62

What are the two primary sources of capital available to an entrepreneur? How do these sources of capital differ?

Question 63

What are the primary differences between companies/corporations and sole proprietorships?

Question 64

Suppose that you are the manager of a business that manufactures various types of athletic shoes for sale primarily in your own country. Discuss the pros and cons of locating your manufacturing plants abroad versus locating in your own country.

Question 65

Briefly outline the three management activities that contribute to the operations of a business?

Question 66

Describe the planning function of management.

Question 67

Describe the evaluating function of management.

Question 68

Describe the operating function of management.

Question 69

What is the role of budgeting?

Question 70

What role does cost analysis play in management activities?

Question 71

What role do manufacturing cost reports play in management activities?

Question 72

Why is it important to apply generally accepted accounting principles (GAAP) when preparing financial reports?

Question 73

Briefly describe the information contained in an Income Statement.

Question 74

What is the purpose of a code of ethics?

Question 75

Your friend has been provided with the most recent financial statements for a business that she is interested in buying. She is familiar with the income statement and cashflow statement but is unsure about the contents of the balance sheet. Briefly describe the information contained in a balance sheet.

Question 76

You really like the topic of accounting and are considering it as a possible career opportunity. You are aware that professional accountants are bound by a code of ethics. Discuss some of the issues that are addressed by having a code of ethics.